Perdue Company purchased equipment on April 1, 2014, for $270,000. The equipment was expected to have a
Question:
Perdue Company purchased equipment on April 1, 2014, for $270,000. The equipment was expected to have a useful life of three years, or 18,000 operating hours, and a residual value of $9,000. The equipment was used for 7,500 hours during 2014, 5,500 hours in 2015, 4,000 hours in 2016, and 1,000 hours in 2017.
Instructions
Determine the amount of depreciation expense for the years ended December 31, 2014, 2015, 2016, and 2017, by
(a) The straight-line method,
(b) The units-of-output method, and
(c) The double-declining-balance method.
Step by Step Answer:
Depreciation Expense a b c Straight Units of DoubleDeclining Year Line Production Balance 2014 65250 ...View the full answer
Financial and Managerial Accounting
ISBN: 978-1285866307
13th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
Related Video
In accounting terms, depreciation is defined as the reduction of the recorded cost of a fixed asset in a systematic manner until the value of the asset becomes zero or negligible. An example of fixed assets are buildings, furniture, office equipment, machinery, etc. The land is the only exception that cannot be depreciated as the value of land appreciates with time. Depreciation allows a portion of the cost of a fixed asset to be the revenue generated by the fixed asset. This is mandatory under the matching principle as revenues are recorded with their associated expenses in the accounting period when the asset is in use. This helps in getting a complete picture of the revenue
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